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Goa VAT cut sparks petro rush from Karwar
April, 04th 2012

The Goa governments move to cut value added tax (VAT) on petrol by 11 per cent is likely to put out of business petrol bunks in Karwar across the border in Karnataka.

With petrol in Goa becoming cheaper by Rs 19 from Monday, petrol bunk owners in Karwar fear that people will start going to the neighbouring towns in Goa to fill their vehicle tanks. Karwar is 13 km from Polem in Goa. According to owners of petrol bunks in Karwar, drivers needing petrol for their vehicles begun to head towards Polem, a sleepy village in Goa making a killing out of the sale of petrol.

The Goa government headed by Manohar Parrikar has cut the VAT in order to reduce the burden of increasing price of petroleum products on thecitizens as per its poll promise. Currently, at the existing?VAT rates, while the petrol bunks in Karwar sell petrol at Rs 74 per litre, Polem used to sell it at Rs 65.61.

However, from April 2, Goa lowered the petrol price to Rs 55 per litre. With Karwar petrol bunks already unable to attract customers traversing on the highway, due to cheaper oil prices in Goa, there is an increasing fear that they will be forced to shutdown. Most of us will run out of business due to the heavy VAT tariff in Karnataka, said the bunk owner.

Polem has two petrol bunks and is also home to a dozen liquor stores. Despite Karwar having seven petrol bunks, the two petrol stations in Polem are selling thrice the quantity of petrol that we dispense, said a petrol bunk owner on the telephone from Karwar.

Adding salt to injury, even as drivers head to Goa to fill up, smuggling of the oil into the town of Karwar is increasing.

According to pump owners, the two petrol bunks in Polem sell close to 7,000 litres of petrol everyday, while sales at Karwars seven petrol pumps have come down to 800 litres.

With the new VAT, the difference in the cost of petrol per litre will be Rs 19, an amount that few commuters are willing to sacrifice in our town, as it is closer to Goa, said a dealer.

  We are seeing cases of smuggling of petrol in huge numbers. Autorickshaw drivers have begun sending vehicles to Polem to fill petrol at a cheaper rate and distribute it in Karwar for a profit. A can of petrol will cost anywhere close to Rs five extra over the Goan prices of petrol, said another petrol bunk owner.

The petrol bunk owners have complained to the Deputy Commissioner of Karwar, but to no avail.

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